Investors' Failure to Link Merrill's Reports to Losses Is Fatal to Suits

Investors who blamed Merrill Lynch analysts for Internet stocks' price collapse failed to charge specifically how misleading reports and ratings caused their losses, properly leading to the suits' dismissal, the 2nd Circuit has ruled. In a decision expected to raise the bar for suits based on analyst recommendations and to jeopardize other actions against Merrill Lynch, the circuit said requirements for pleading "loss causation" demand a direct, tangible link between analysts' actions and investor losses.

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